Question

XAE-2 company is reviewing the behavior of its various activities. XAD is considering various costs. The company manufactures two models of computers. The laptop computer (model MX10) is a top of the line, deluxe model. The tower computer (model DX 20) is the regular model.

The following activity data is provided:

Activity Usage Measures	Model MX10	Model DX20	Total
Units produced annually	15,000	40,000	55,000
Prime costs	$40,000	$100,000	$140,000
Machine hours	40,000	60,000	100,000
Production runs	14	6	20
Direct labor hours	20,000	30,000	50,000

The company primarily has three major activities as follows in the production process:

Activity	Activity Cost
Setups	$50,000
Inspections	$30,000
Power	$15,000

                  Calculate the unit cost of model DX 20.

Select one:

a. $2.50

b. $3.33

c. $4.05

d. some other figure not listed here

e. $3.55

Answer 1

particulars	amount	units basis	units	cost per unit
prime costs	1,00,000.00	units produced	40,000.00	2.5
set up	50,000.00	productin runs	40,000.00	1.25	it is assumed that set up cost are allocated on basis of acutal output
inspections	30,000.00		40,000.00	0.75	it is assumed that inspectons cost are allocated on basis of acutal output
power	15,000.00	mahcine hours	60,000.00	0.25
cost per unit				4.75